Editorial | Hospital pricing: a secret system

Crystal McGrew and her son, Amos, 2.

As we become ever more conscious of health care costs, here's a question that begs an answer:

How can the same simple procedure at one Louisville hospital cost more than three times that amount at another?

That was the question raised in a story in Monday's Courier-Journal by Laura Ungar in which a mother wonders why her young son's ear tubes cost $1,560 at Kosair Children's Hospital and a year later, $5,260 at Jewish Hospital Medical Center East.

The short answer is that there is no answer. Hospital pricing is neither fair nor logical under a complex and murky system that allows individual hospitals to set their own rates, resulting in wildly varying charges within the same community for the same procedures.

"How do hospitals set prices?" Glenn Melnick, a California health economics professor, asked in a recent New York Times story. "They set prices to maximize revenue and they raise prices as much as they can - all the research supports that."

It's an issue attracting increased national scrutiny as consumers with rising deductibles become more conscious of health care costs and what they must pay.

And it most definitely undercuts critics of the Affordable Care Act who argue for a free market approach to health care with competition as the best way to bring prices down. That health care "free market" got us to where we are today.

Few things are more competitive than the health care industry yet prices around the country are soaring at some hospitals in a business largely organized through nonprofit entities with enormous tax benefits. That leaves baffled consumers looking at huge bills for even minor procedures, such as the California woman charged $2,229 for three stitches to a cut on her knee, according to the New York Times.

Health policy experts say one solution is for consumers to shop more wisely as health care becomes an increasingly retail commodity.

Yet it's hard to shop when hospitals can't explain their prices or decline to release them. It is a secret system that must become more transparent.

Some states have begun to address the mystery of hospital charges, including California, which requires the disclosure of typically secret price lists. New York last year released similar data over objections of hospital trade groups who argued access to such information would confuse consumers.

Critics of "Obamacare" have constantly demanded the law be repealed but offer no alternative. Instead, they should demand changes that help make health care a truly free marketplace.

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Editorial | Hospital pricing: a secret system

As we become ever more conscious of health care costs, here's a question that begs an answer: How can the same simple procedure at one Louisville hospital cost more than three times that amount at